Grants and Incentives for Renewable Energy

Renewable Heat Incentive & Feed-In-Tariffs

The Government has introduced cash incentives to encourage businesses and householders to invest in renewable energy technologies.

The main sources of funding for renewable technologies are; the Renewable Heat Incentive (RHI) and Feed-In Tariffs (FITs).

Renewable Heat Incentive (RHI)

The RHI applies to heat producing renewable technologies such as heat pumps, solar thermal and biomass. It is administered by the official regulator Ofgem.

Commercial RHI

This Scheme supports renewable heat installations in business, industry and the public sector as well as multiple domestic houses. RHI payments are made over a period of 20 years with payments received quarterly. See Ofgem's easy guide to the non-domestic RHI here.

Tariff rates from 01/04/18 are as follows:

Technology

Commercial RHI Tariff p/kWh from 20/09/17

Ground/Water Source Heat Pump

9.37p for the first 1314 hours (tier 1)

2.79p for above 1314 hours (tier 2)

Air Source Heat Pumps

2.69p

Solar Thermal

10.44p less than 200 KWth

Biomass

2.9p to 2.06p size dependent

Worked example, your premises requires 1,000,000kWh/annum and needs 500kW of heat to keep it warm on the coldest design day of the year. A 500kW ground source heat pump is installed with a heat meter, entitling you to receive RHI payments.

In year 1 the heat meter records 1,000,000kWh as the heat produced by the heat pump

1,000,000kWh divided by 500kW = the number of hours the heat pump in a year (2000 run hours)

The payment for the first 1314 run hours is 9.37p x 500kw x 1314 = £61,561

The payment for the remaining run hours is 2.79p x 500kW x (2000-1314 hrs) = £9,570

The RHI payments in year 1 are, = £71,131

Each year the RHI increases in line with the consumer price index (CPI)

Domestic RHI

On 9th April 2014 the Department of Energy and Climate Change (DECC) launched the Domestic Renewable Heat Incentive (RHI), the scheme is expected to be open to new entrants until 2020. Once you are accepted onto the scheme then the payments are received for 7 years.

This is the first scheme of its kind in the world and offers homeowners payments to offset the cost of installing renewable systems in their properties.

The Scheme is administered by Ofgem, you can see their factsheet on the domestic RHI here.

In essence, households will be paid the following tariff for every kWh of renewable heat generated by a supported technology, the tariff is paid quarterly over a 7 year period by OFGEM direct to the customer. Current tariffs with effect from 01/04/18 are as follows:

Technology

Domestic RHI Tariff pence/kWh

Cap on payments

Ground/Water Source Heat Pump

20.46p

30,000KWh

Air Source Heat Pump

10.49p

20,000KWh

Solar Thermal

20.66p

N/A

Biomass

6.74p

25,000Kwh

Each year the RHI increases in line with the consumer price index (CPI)